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Modeling competition and the integration of modern grid technologies in two-tiered emerging electricity markets

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The electric grid is changing rapidly with a proliferation of new technologies being integrated. There is a need to analyze the growth in technologies to help move towards a carbon-free electricity sector such as renewable generation and large scale battery installations. This is occurring at the same time as the growth of markets that rely on electricity which are necessary to aid in the zero-carbon transition like electric vehicles or are seeing massive growth due to the increased power of computing like data centers. Complicating this is the fact that the market for electricity and the downstream markets that depend on them (EV charging, data centers) operate as two tiers of technically separate but interlinked markets. In this work we introduce analysis of when this occurs and what implications it has on both the electricity market and consumers who exist in the downstream market. We focus on three major applications. The first is integrating EV charging infrastructure in parking spots. We present two models to analyze this. The first examines a single entity with existing parking infrastructure that can add EV charging stations to a number of spots, but faces an uncertain size in the market for EVs who would use these spots. We show this uncertainty can have large implications on their investment level in charging. We then move on to a duopoly model where two firms face a known EV market but must make the same decision to invest in EV parking while competing with each other over both the market for drivers requiring charging and those that do not. The second application involves firms choosing to invest in renewable generation that can be used to serve a downstream market that requires electricity. Furthermore, these firms are differentiated from each other in this market (for example, serving different locations where EV drivers can charge). The firms first choose a level of renewable generation and then compete over prices. They also have the ability to sell back any excess electricity generation they produce on-site to the grid. We analyze two models in this setting. In our first model we show the non-linear and sometimes surprising impact that the spot price of electricity and the feed-in tariff (the compensation firms get for selling back to the grid) can have on equilibrium behavior. In our second we show how the distribution of the on-site renewable generation can have important implications on aggregate outcomes. The final application focuses on the ability of Battery energy storage systems (BESSs) and entities that aggregate EVs (i.e. charging stations) to provide regulation capacity to the grid which helps smooth generation and load throughout the day. As this occurs the EV aggregators have the ability to compete with one another to attract EV drivers which both require the purchase of electricity to charge but also gives the aggregator the ability to utilize them to provide this regulation capacity. We present a number of numerical examples to show the impact of offering this regulation and demonstrate that the amount of capacity different entities can offer has important implications on the system as a whole as well as for the EV drivers utilizing the aggregator's services.

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